BlackRock is seeking as much as $2bn for a new co-investment fund, as it builds on a strategy gaining traction in the private equity industry.
The PE giant has already raised more than $300 million for the new vehicle, according to people familiar with the fundraising.
Regulatory filings show that the firm began marketing the fund, BlackRock Private Opportunities Fund V, earlier this year.
The fund’s 2018-vintage predecessor collected $1.6 billion in committed capital from institutional investors including KBC Group, Icelandic General Pension Fund and West Midlands Pension Fund, according to PitchBook data.
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BlackRock hasn’t publicly identified portfolio companies held within Fund IV. The vehicle may have financed BlackRock’s May 2020 investment in ContentSquare, a digital experience analytics company, according to PitchBook data.
Fund III, which closed in 2016 on more than $630 million, targeted investments in areas including consolidation and roll-up plays, corporate carve outs, energy and special situations, growth opportunities in Asia, as well as family-owned and small-cap buyout and growth opportunities.
BlackRock, which managed more than $10 trillion in assets at the end of last year, declined to comment on fundraising for the new fund.
PitchBook’s lead PE analyst Wylie Fernyhough said he expects PE firms to increase the use of co-investments and other strategic structures to entice LP contributions this year as sponsors are facing intensifying competition for LPs’ capital.
The firm rolled out several new funds last year, including a $1.67 billion global infrastructure debt strategy and a $3 billion fund to invest in the PE secondary market. BlackRock also is raising fresh money for its long-term private capital strategy, with the goal of collecting an additional $2 billion to $3 billion, according to a Bloomberg report.
So-called co-investment funds allow limited partners to acquire stakes in businesses alongside private equity firms on more favorable fee terms than blind-pool private equity funds. GPs can also pursue larger deals with the help of co-investment capital.
BlackRock’s new fundraising is the latest sign of the strong appetite for co-investments in recent years. The strategy is favored by large pension funds and other institutional investors who are seeking to lower the costs of their private equity portfolios and exercise more control over their investments.
In March, the California State Teachers’ Retirement System decided to increase its allotment to co-investments to up to 2% of private equity net asset value. That would be about $880 million, up from the previous $250 million.
Other LPs are increasing or adding co-investment commitments, including the Massachusetts Pension Reserves Investment Management Board, the Maine Public Employees Retirement System and the Orange County Employees Retirement System.
Source: Pitchbook
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